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CS Executive · Capital Market and Securities Laws · Share Based Employee Benefits and Sweat Equity

Meera Logistics Ltd, a listed company, has bought back shares from employees who earlier acquired them on exercising options. Under section 68 of the Companies Act, 2013, how is this mode of buy-back described?

Such a buy-back falls under the mode of purchasing securities issued to employees of the company pursuant to a scheme of stock option or sweat equity, as listed in section 68(5)(c). It differs from the proportionate tender route to existing shareholders and from open market purchases.

  1. APurchasing the securities issued to employees pursuant to a scheme of stock option or sweat equityCorrect
  2. BBuy-back from existing shareholders on a proportionate basis
  3. CBuy-back from the open market
  4. DBuy-back through a rights issue

Explanation

Section 68(5)(c) lists purchase of securities issued to employees under a scheme of stock option or sweat equity as a distinct mode. The other modes are proportionate purchase from existing holders and open market purchase. A rights issue is not a buy-back mode.

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